LSPs must provide innovation when outsourcing distribution

Monday, September 24, 2012

More than 40 percent of companies that outsource part of their logistics and distribution operations plan to conduct a bid or re-bid with their logistics service providers (LSPs) in the next 12 months, according to a recent study by Tompkins Supply Chain Consortium.
The Outsourced Distribution Report found shippers are still worried about the economy and cash flow but are faced with the need to add logistics capacity to their existing networks.
Tim Pyne, vice president at Tompkins International and co-author of the report, said shippers will increasingly "look to LSPs to fill this gap and want to ensure that they join up with a provider that meets their performance expectations.”
The report looked at shippers in the retail, consumer products, industrial, and wholesale industries, and found the biggest areas in which LSPs need to improve include innovation and problem solving.
“Regular communication sessions, in addition to providing operational recommendations for positive change, will go a long way toward improving the satisfaction ratings in innovation and problem solving,” said Chris Ferrell, director of Tompkins Supply Chain Consortium.
Most shippers are currently content with their LSPs' performance in the areas of flexibility, safety, order fulfillment accuracy, and turnaround, the report said.
Other news from the study found more than half of companies surveyed already outsource part of their distribution operations, and about 74 percent have signed a long-term contract with an LSP.